Obama tax deal being larded up with special interest gifts to win Democrat congressional votes

At what point will the Republicans jump ship? Even if they like that the current tax rates are generally continued, at what point does all this committed future spending become too much? It seems that the Republican House won't require all this special interest favors to pass the bill after they take over in January. The Democrats currently have massive majorities in both the House and Senate, and they have had two years to work on this with Obama and two previous years to work on this when Bush was president, but the Democrats in the congress have waited until the last minute.

The tax deal, reached behind the scenes and still informal, now includes ethanol subsidies for rural folks, commuter tax breaks for their cousins in the cities and suburbs and wind and solar grants for the environmentalists -- all aimed at winning votes, particularly from reluctant Democrats.The holiday additions are being hung on the big bill that was Congress' main reason for spending December in Washington, long after the elections that will give Republicans new power in January. The measure will extend Bush-era tax cuts, averting big tax increases for nearly all Americans, and keep jobless benefits flowing.Republicans generally liked that agreement, worked out by Obama and GOP leaders. Democrats generally didn't, hence the add-ons. . . .

Almost $5 billion in subsidies for corn-based ethanol and a continuing tariff to protect against ethanol imports were wrapped up and placed on the tree Thursday night for farm-state lawmakers and agribusiness lobbyists. Environmentalists won more grants for developers of renewable energy, like wind and solar.For urban lawmakers, there's a continuation of about-to-expire tax breaks that could save commuters who use mass transit about $1,000 a year. Other popular tax provisions aimed at increasing production of hybrid automobiles, biodiesel fuel, coal and energy-efficient household appliances would be extended through the end of 2011 under the new add-ons.The package also includes an extension of two Gulf Coast tax incentive programs enacted after Hurricane Katrina to spur economic development in Mississippi, Louisiana and Alabama.The ethanol money was added despite a growing congressional opposition to subsidizing the fuel after decades of government support. Last month, 17 Republican and Democratic senators wrote to leaders calling the tax breaks "fiscally indefensible," since there's already a law in place that requires ethanol be blended into gasoline. . . .

Even if the pork may be aimed at Democrats, there are apparently a few Republicans who are quite happy with it. Senator Chuck Grassley is among them.

The Senate's tax bill will include a 45 cent-per-gallon ethanol tax credit for one more year, through the end of 2011, a spokesperson for Senator Chuck Grassley (R-IA) told Agriculture.com at Thursday evening.The tax credit is in the draft of the tax extension bill the Senate is expected to vote on soon, said Beth Pellett Levine.The law will also reinstate the $1 a gallon biodiesel tax credit, retroactively for 2010 and through 2011, she said. . . .

Confusing the amount spend by government with size of stimulus

I admire Charles Krauthammer, but every once in a while he is completely wrong. Possibly this is one case where his very liberal background (Mondale's speech writer during the 1984 campaign) comes through. His most recent op-ed is such a case.

Barack Obama won the great tax-cut showdown of 2010 - and House Democrats don't have a clue that he did. In the deal struck this week, the president negotiated the biggest stimulus in American history, larger than his $814 billion 2009 stimulus package. It will pump a trillion borrowed Chinese dollars into the U.S. economy over the next two years - which just happen to be the two years of the run-up to the next presidential election. This is a defeat? . . .

If you want an explanation for why more money being spent by the government doesn't mean more of a stimulus, see this here.

Possibly, Charles is just trying to give liberal Democrats a hard time and show that Republicans are willing to more than compromise with Obama, but that liberals are unwilling to compromise. That way, Democrats will face more of the blame when taxes go up in January. Tax increases should be the Democrat's fault anyway because they massively control everything right now in Washington.

“We are allowing the liberal wing of the Democratic Caucus to hold these critically needed tax cuts hostage,” Rep. Dan Boren (D-Okla.) told POLITICO. “It is long past time to get this deal done and get our economy moving again. Unfortunately, my colleagues are either not listening to what the voters are saying, or they are not interested in doing what is best for the American economy.” . . .

12/10/2010

Focus group turns uncivil over Obama's "hostage" comment

The language that President Obama uses and the way he so openly attacks people has really created some hard feelings. A black woman who speaks early on in this discussion says that Obama obviously didn't mean what he said and that people should just move on. If true, what is gained by such language? There is at least some chance that your opponents will take what you are saying seriously so why say it?

New Fox News piece: The Democrats Flip-Flop On Tax Cuts

For years, Democrats have bashed Republicans over tax cuts. Tax cuts supposedly did nothing to encourage work and, thus, when President Bush cut tax rates across the board, it only lined the pockets of the wealthy. This rhetoric repeated over and over for the last decade. But now President Obama's tax rate agreement is creating massive confusion among Democrats and many Senators will cast their vote tonight in contradiction to their previously stated positions.In September 2001, a New York Times editorial summed up the received wisdom of Democrats: "the Bush tax cut wasn't designed to fight a recession." The very same editorial noted that Larry Summers, presently Obama's chief economic adviser, also opposed Bush's lower tax rates as he claimed it wouldn't help the possible recession the economy was then suffering. Well, that was then, this is now. On Wednesday, Larry Summers told reporters that failure to maintain the Bush tax rates "would stall [the economy] and we would have a double dip" recession. . . .

Has Obama alienated everyone?

I felt the same way as Noonan when I heard President Obama's press conference. Can Obama really be surprised when other Democrats reject his agreement on taxes when talks about the deal coming across as a result of "hostage takers"? Obviously a president can turn things around quickly. A president has a huge amount of power and he can control much of the agenda. A president can never be counted out (remember Clinton being counted out prematurely?). My concern is that Obama is at a position where he can't make a deal even with his base. If his own base doesn't believe his promises, it does significantly reduce his ability to make deals.

Normally a president, having agreed with the opposition on something big, would go through certain expected motions. He would laud the specific virtues of the plan, show graciousness toward the negotiators on the other side—graciousness implies that you won—and refer respectfully to potential critics as people who'll surely come around once they are fully exposed to the deep merits of the plan.

Instead Mr. Obama said, essentially, that he hates the deal he just agreed to, hates the people he made the deal with, and hates even more the people who'll criticize it. His statement was startling in the breadth of its animosity. Republicans are "hostage takers" who worship a "holy grail" of "tax cuts for the wealthy." "That seems to be their central economic doctrine."

As for the left, they ignore his accomplishments and are always looking for "weakness and compromise." They are "sanctimonious," "purist," and just want to "feel good about" themselves. In a difficult world, they cling to their "ideal positions" and constant charges of "betrayals."

Those not of the left might view all this as straight talk, and much needed. But if you were of the left it would only deepen your anger and sharpen your response. Which it did. "Gettysburg," "sellout," "disaster."

The president must have thought that distancing himself from left and right would make him more attractive to the center. But you get credit for going to the center only if you say the centrist position you've just embraced is right. If you suggest, as the president did, that the seemingly moderate plan you agreed to is awful and you'll try to rescind it in two years, you won't leave the center thinking, "He's our guy!" You'll leave them thinking, "Note to self: Remove Obama in two years." . . .

Most Americans say that they are worse off since Obama became president

The survey, conducted Dec. 4-7, finds that 51 percent of respondents think their situation has deteriorated, compared with 35 percent who say they’re doing better. The balance isn’t sure. Americans have grown more downbeat about the country’s future in just the last couple of months, the poll shows. The pessimism cuts across political parties and age groups, and is common to both sexes.

The negative sentiment may cast a pall over the holiday shopping season, according to the poll. A plurality of those surveyed -- 46 percent -- expects to spend less this year than last; only 12 percent anticipate spending more. Holiday sales rose by just under a half percent last year after falling by almost 4 percent in 2008. . . . .

12/09/2010

The cost of protectionism

On the night of Dec. 2, almost 500 gadget-crazy Brazilians in São Paulo lined up outside electronics retailer FNAC's big store in Morumbi Shopping complex south of the city. They waited until midnight to buy the Apple (AAPL) iPad, which finally went on sale in Brazil months after its international launch. First in line was Joao Teofilo Ribeiro, who was so excited he brought his entire family to wait with him.

They weren't looking for a bargain. The iPad lists at FNAC and other Brazilian stores for $985, almost twice as much as in the U.S. and one of the highest official prices for an iPad anywhere, according to Macworld Brazil, a Brazilian newsletter run by U.S.-based International Data Group.

The iPad is one example of the many price distortions caused by Brazil's elaborate industrial policy. Companies that don't manufacture goods in Brazil have to pay stiff tariffs if they want to sell to the nation's consumers. Brazil levies a 60 percent tax on the iPad and as much as 90 percent on imported cars. A blouse that retails for $49.50 at The Gap in the U.S. goes for $82 in Brazil at non-Gap outlets. "Brazilians sometimes pay luxury-good prices for second-rate items," says tax specialist André Mendes Moreira, who writes a widely read financial column and tracks the impact of import taxes on everything from cars to champagne. "The consumer is at a clear disadvantage." . . .

Crazy gun free zone laws messes up Honor student's life

The fact that the government can't differentiate between good people and bad people with guns is a big mistake. The fact that the gun free zone laws only really stop good people and not criminals needs to be recognized. These bans attract problems rather than stop them.

On the morning of Dec.1, Demari DeReu drove to Columbia Falls High School in Montana and parked her blue-green Honda Accord in the lot, just as she does every morning. The 16-year-old honor roll student, class treasurer and varsity cheerleader walked in to school, forgetting entirely about the unloaded hunting rifle locked in the trunk of her car.Later that day, there was an announcement telling students contraband sniffing dogs were scouting the parking lot, sparking her memory. She immediately told administrators that she’d forgotten to remove her scoped hunting rifle from the trunk following a Thanksgiving family hunting excursion. She was suspended from school for violating federal and state gun laws.On Monday, the school board will convene for a hearing to decide the fate and academic future of the high school junior, who recently was voted most dedicated cheerleader by her teammates and coach. . . . .

"More Than Half of Americans Want Fed Reined In or Abolished"

When I first read the headline for this Bloomberg News piece, I thought this is good news. Unfortunately, what is being discussed here, eliminating the Fed's independence, will make it even more political. What would be nice if the government abolished the Fed and let banks issue competing currency. Competition would do more to restrain aberrant money supply behavior than any government can be trusted to behave.

The survey, conducted Dec. 4-7, also shows deep skepticism, especially among Republicans, over the Fed’s Nov. 3 announcement that it would buy bonds in an attempt to bring down unemployment and prevent deflation. More than half say the purchases won’t help the economy.

The policy, known as quantitative easing, was the target of criticism in Washington and overseas. That prompted Fed Chairman Ben S. Bernanke to appear in an interview on CBS television’s “60 Minutes” program on Dec. 5 to defend his actions.

Across the Spectrum

Americans across the political spectrum say the Fed shouldn’t retain its current structure of independence. Asked if the central bank should be more accountable to Congress, left independent or abolished entirely, 39 percent said it should be held more accountable and 16 percent that it should be abolished. Only 37 percent favor the status quo.

In a previous poll, conducted Oct. 7-10, 35 percent of Americans said the Fed should be radically overhauled, while 8 percent said it should be abolished.

Republicans and independents are more likely to support ending the Fed, with 19 percent of independents, 16 percent of Republicans, and 12 percent of Democrats wanting to do away with the central bank. Among those who identify themselves as supporters of the Tea Party movement, which wants to rein in government, 21 percent want to abolish the Fed. . . .

Will there be a Democrat challenge to Obama

Will Nader run against Obama as a Democrat? Will Nader's decision cause a more prominent Democrat to run? The more bizarre thing is that Obama is the most left wing politician to ever be president, but there are even more left wing Democrats who are upset.

Perennial third-party candidate Ralph Nader predicted on Wednesday that President Obama's tax deal with Republicans will earn him a primary challenge in 2012.

Though he wouldn't rule out another presidential campaign himself, Nader, 76, said he hoped that a new face would take up the progressive cause.

"I'm not foreclosing the possibility ... There are just other things to do," he said. "And it's time for someone else to continue. I've done it so many times. When I go around the country, I'm telling people they need to find somebody."

Nader, a consumer advocate, described the immense procedural difficulty — the "obstructions and litigations" — of appearing on the ballot in every state as a third-party candidate. He ran under the Green Party banner in 1996 and 2000 and as an independent in 2004 and 2008, and earned less than three percent of the overall vote each time.

He said on Wednesday that Obama's decision to allow tax-cut extensions for the wealthy in the lame-duck deal betrays the progressives who supported his campaign in 2008.

"There will be a primary," Nader said. "Just a question of how prominent a person [will run against Obama]. This deal is the last straw." . . .

Some useful numbers on government spending and revenue

"Pentagon’s Gay Poll Was A Sham"

The Pentagon's poll on "don't ask, don't tell" is beyond idiotic. Instead of asking whether the troops support repeal of DADT, the Pentagon asked only if they can learn to play nice with the gays.

Even more absurdly, the Pentagon polled all military "personnel" -- and their spouses! Only a small portion of what is known as "the military" actually does the fighting. The rest is a vast bureaucracy along the lines of the DMV. . . .

Senator Coburn concerned about the increased de

12/08/2010

Apparently making currency that is hard to counterfeit is very difficult

It took a little while to figure out this error. This is interest both in terms of how hard it is to make currency that is difficult to counterfeit. But also it shows how these mistakes in recalling the currency impose costs on American companies.

With the holiday shopping season in full swing, authorities are scrambling to do everything they can to keep U.S. cash flowing. 'There is something drastically wrong here,' one source told CNBC. 'The frustration level is off the charts.' . . .CNBC sources claimed that printers have produced 1.1 billion of the new bills - but those bills are unusable because of a creasing problem.The paper folds over during production - revealing a blank, unlinked portion of the bill face.After printing, officials discovered that some of the new bills have a vertical crease that, when the sides of the bill are pulled, unfolds and reveals a blank space on the face of the bill.At first glance, the bills appear completely printed - but they are not. . . .

Investors seem to be convinced that commodity prices are heading up

This is the type of activity that you see when investors' believe that inflation is going to increase.

Investors are holding their biggest positions on record in the commodities markets as prices surge and debate intensifies among U.S. regulators about whether to limit the amount that any one trader can bet in markets for energy, metals and agricultural products.

Hedge funds, pension funds and mutual funds dramatically ramped up their holdings in everything from oil and natural gas to silver, corn and wheat this year. In many cases, the number of contracts held for individual commodities now far exceeds the amount outstanding in mid-2008, the last time commodity markets were soaring to records and debate raged about whether excessive speculation was driving up prices.

Contracts held by investors have risen 12% this year through October and are 17% higher than June 2008, according to data from the Commodity Futures Trading Commission, the market regulator. . . .

12/07/2010

New Fox News piece: Does President Obama Understand Economics?

Neither government spending nor tax cuts automatically provide an economic stimulus. But President Obama has continued to make this mistake. Take a look at much of what he insisted be included in his tax cut deal with congressional Republicans.So what makes the economic pie bigger? There are two sides to this. The supply side: lower marginal tax rates mean the more that people get to keep from each additional dollar that they earn, the harder that they will work and the more that they will produce.The other view, the Keynesian view, also often called "the demand side view" or "the multiplier," is that giving the money to the right people to spend which will create wealth. Democratic House Speaker Nancy Pelosi made this claim earlier this year when she advocated more unemployment insurance benefits: "it injects demand into the economy and is job creating. It creates jobs faster than almost any other initiative you can name. Because again it is money that is needed for families to survive and it is spent."We see this line of reasoning in the proposed 13-month extension of unemployment insurance benefits to continue paying out benefits for up to 99 weeks. It is also the basis for the president's proposed expansion of the earn income tax credit and items such as the college-tuition tax credit for relatively lower-income families. . . .

12/06/2010

"I immediately asked why we were having to go through an extra search, and no one else was being made to do so, indicating the long line of other passengers in front of and behind where we had been in line. In a very sarcastic tone, and still holding me by the elbow, the agent responded, 'Because you caught my eye, and they' -- pointing to the other passengers -- 'didn't.'"

D'Errico is still wondering how she caught his eye while others didn't. . . .

The TSA rules regarding scans and searches dictate that passengers can select a scan or a search. D'Errico says that was never an option.

"They never even told me what they were doing at all, or that I had any choice," she said. "It was just, 'Stand here. Raise your arms above your head like this.' They never told me that they were going to be conducting a full-body scan, or that I had the option of being searched instead. Had they explained what they were doing, I would have opted for the search. As a matter of fact, my son was made to not only go through the full-body scan, but they also conducted a pat-down search on him as well.

"After the search, I noticed that the male TSA agent who had pulled me out of line was smiling and whispering with two other TSA agents and glancing at me. I was outraged." . . .

More indoctrination in public schools

The parents of a Bedford teen are calling for the ouster of school officials who assigned their son a book that refers to Jesus Christ as a "wine-guzzling vagrant and precocious socialist.""We had almost PhD people letting this fumble through their fingers, and they all said it was grand," said Dennis Taylor, a conservative Christian. "I think there should be a review of these individuals and perhaps some firing done."Taylor and his wife Aimee became upset when they learned that their son had been assigned the book "Nickel and Dimed: On (Not) Getting By in America," in his personal finance class at Bedford High School."Nickel and Dimed" is a first-person account of author Barbara Ehrenreich's failed attempts to make a living at various minimum wage jobs across the country. Written in response to 1996 welfare reform, the book offers a serious critique of the current economic system, which Ehrenreich argues preys on the poor.This fall, Dennis and Aimee Taylor complained about the book to the school district, citing its occasional use of obscene dialogue and anti-capitalist message."The author is a known social Marxist, hates everything American, everything that America stands for or was built on," Aimee Taylor said. "I mean when you read the book you see that strongly in this woman's agenda. It's horrible." . . .

A consequence of the high price of postage

If the post office had some competition, my guess is that the lower costs of postage would result in less counterfeiting.

As the U.S. Postal Service grapples with service cuts and massive budget shortfalls, an estimated $134.4 million dollars of its annual revenue is quietly slipping away to counterfeiters and perpetrators of other types of postal fraud.Counterfeit stamps have been identified as a steady, recurring risk for the U.S. Postal Service, which reported a loss of $8.5 billion in the last fiscal year, and they are one of the 10 biggest threats to Postal Service revenue, according to the 2009 annual report of the U.S. Postal Inspection Service, the law enforcement arm of the Post Office. . . .

So much for Obama's promise to freeze Federal workers' salaries

After getting wage increases faster than inflation over the last couple of years, a two-year pay freeze would just get federal workers closer to what other American workers have been getting. Over the last two years, average weekly earnings for all private sector employees increased by 3.74 percent in hourly earnings and by 3.73 percent in weekly earnings, a 1.9 percent increase per year. Over that period of time Federal workers got a 3.9 percent base salary raise in 2009 and a 2 percent increase in 2010 -- that is a net increase of 5.98 percent over two years. But this doesn't account for the step increases that occur virtually automatically for federal workers. And because of these other increases it is clear that a freeze for Federal workers isn't really a freeze at all. From this piece below it appears that on average these steps increase federal pay by about 3 percent every 2.5 years, or about 1.2 percent per year. Add 1.2 percent to the 3.9 and 2 percent increases in the last two years implies an increase over those two years of roughly 8.5 percent. Not bad given the comparison to private sector workers. Even a complete freeze for the next two years would very likely leave federal workers still better off than their private sector counterparts.

President Obama spoke of the need for sacrifice last week when he announced a two-year pay freeze for federal employees.

But feds won't be too terribly deprived in 2011 and 2012. Despite the freeze, some 1.1 million employees will receive more than $2.5 billion in raises during that period.

Congress is expected to approve Obama's proposal, which cancels only cost-of-living adjustments for two years. Regularly scheduled step increases for the 1.4 million General Schedule employees — who make up two-thirds of the civilian work force — will continue. The size of those increases ranges from 2.6 percent to 3.3 percent and by law kick in every one, two or three years, depending on an employee's time in grade.

John Gage, national president of the American Federation of Government Employees, called Obama's plan "wrongheaded" and driven by politics. But he said the news that step increases will not be affected takes some of the sting out of the decision.

"They're doing this as a symbol, but it's the wrong type of symbol to take it out on working people making basic wages," Gage said.

But Rep. Jason Chaffetz, R-Utah, called the retention of step increases a hole in Obama's plan. He also said the administration should freeze hiring and reduce the federal payroll from $447 billion to $400 billion.

"Somehow, someway I think this country can survive on just a $400 billion payroll," Chaffetz said. He is the ranking Republican on the House Oversight and Government Reform subcommittee on the federal work force, and could become chairman when Republicans take control of the House next year.

In addition to General Schedule employees receiving step increases, some of the government's roughly 187,000 wage-grade employees also will receive step increases.

And many employees will receive promotions, which also come with salary increases, Jeffrey Zients, the Office of Management and Budget's deputy director for management, said last week.

Many senior employees won't get raises, but will receive bonuses for good performance, although OMB and the Office of Personnel Management are telling agencies to cap bonuses at 2010 levels. OPM said it does not yet have information on fiscal 2010 bonuses, but the Asbury Park Press of New Jersey reported in June that the government paid $408 million in bonuses to 359,400 people, an average $1,135 each, in fiscal 2009. . . .

The inaccuracies in the Valerie Plame Movie "Fair Game"

We certainly hope that is not the case. In fact, "Fair Game," based on books by Mr. Wilson and his wife, is full of distortions - not to mention outright inventions. To start with the most sensational: The movie portrays Ms. Plame as having cultivated a group of Iraqi scientists and arranged for them to leave the country, and it suggests that once her cover was blown, the operation was aborted and the scientists were abandoned. This is simply false. In reality, as The Post's Walter Pincus and Richard Leiby reported, Ms. Plame did not work directly on the program, and it was not shut down because of her identification.

The movie portrays Mr. Wilson as a whistle-blower who debunked a Bush administration claim that Iraq had tried to purchase uranium from the African country of Niger. In fact, an investigation by the Senate intelligence committee found that Mr. Wilson's reporting did not affect the intelligence community's view on the matter, and an official British investigation found that President George W. Bush's statement in a State of the Union address that Britain believed that Iraq had sought uranium in Niger was well-founded.

"Fair Game" also resells the couple's story that Ms. Plame's exposure was the result of a White House conspiracy. A lengthy and wasteful investigation by a special prosecutor found no such conspiracy - but it did confirm that the prime source of a newspaper column identifying Ms. Plame was a State Department official, not a White House political operative. . . .

12/05/2010

Sarah Palin and Ted Nugent on hunting

I think that Sarah Palin's show tonight on The Learning Channel at 9 PM indicates why she connects to so many Americans. The self confidence that she shows is something to be admired. Ted Nugent's clip has him pointing to Palin as one of his heroes.

UPDATE: Predictably PETA goes nuts over Palin's show. It is amusing how they call her Sarah as if to try minimizing Palin's stature.

“Sarah seems to think that resorting to violence and blood and guts may lure people into watching her boring show,” said the statement from PETA Vice President Dan Mathews. “But the ratings remain as dead as the poor animals she shoots.” . . .

Nick Seifert, a sportsman and conservation advocate who hosted the “Straight Shooting” segment of “American Gun Dog” for five seasons and had a 12-year career with Field & Stream and Outdoor Life magazines, about Palin’s skills as a hunter. . . . “It seemed realistic to me, and I’m a pretty harsh critic of that because I see a lot of unrealistic stuff out there on hunting channels. I thought it was an honest hunt and I thought there are a lot of people out there who would like to have that kind of time with their dad.” . . .

The female caribou could easily have escaped, since it took the Wasilla huntress six shots, two rifles and some help from her dad to bag her prey. (Giving credence to Levi Johnston’s contention that she isn’t all that proficient with guns.)

But, inexplicably, the caribou just waited to get gunned down by Sarah Palin, who came across less like a pioneer woman than Private Benjamin with her camo, her French manicured nails, her cap that says (in pink) Girls And Guns, her 72-year-old father and her TLC reality show crew.

Sarah checked her freezer at home before she flew 600 miles to the Arctic, trying to justify her contention that she needs to hunt to eat. . . .

UPDATE3: Here is an interview that Palin had with Laura Ingraham where Palin makes some fairly libertarian arguments for keeping government out of deciding what people should eat.